L-Spark company looks to offer a Qarrot to large franchise employees

A Montreal startup currently embedded in the L-Spark incubator is focused on rapid growth after launching the first phase of a pilot program with the Canadian Imperial Bank of Commerce this week.

Qarrot’s software-as-a-service platform allows large retailers to offer sales incentive or motivation programs to their frontline staff. If the results of a similar pilot run last year with American eye care provider Vision Source are any indication, CIBC should quickly get some traction.

Within six months of its pilot program, Vision Source had doubled its same-store sales year-over-year, according to Qarrot CEO Aaron Carr. The company then rolled out the program throughout its entire network.

Qarrot entered the L-Spark incubator in January under the name Friendify. As the startup’s offering evolved, the rebrand became part of its L-Spark experience.

The new name is a reference to the idiom of offering someone a carrot as an incentive. The company’s founders then decided to tweak the spelling to make the name stand out.

“Carrot is a cool name, but it’s kind of generic,” Mr. Carr said. “If you google carrot, you’ll get a lot of different responses to a lot of different things.”

During an L-Spark brainstorming session, the word “carrot” was written on a white board. An L-Spark adviser erased the C, replacing it with a Q.

“I said, ‘That’s it!’” said Mr. Carr. “It’s comprehensible. You still get the reference to carrot as an incentive, and it’s unique,” he said, adding a Google search for the name will not return with “a bunch of recipes.”

L-Spark actually came calling to the former Friendify to let it know of the potential opportunity of a seat in the incubator, but Mr. Carr said that was no guarantee of admission. In fact, he wasn’t sold on the idea until a second phone call.

Once he learned of Terry Matthews’ involvement in the facility, “it became very interesting,” he said, adding he was also attracted by the success of alumni such as The Better Software Company.

“This is a very experienced group of folks. We’d be foolish not to pursue this opportunity,” he said.

Mr. Carr said the incentive industry is “fairly mature,” with American companies spending $20 billion a year on rewards for their staff.

Qarrot stands out because of its SaaS model, he said. A company can send the reward to an employee’s inbox in “half a second,” he said, as opposed to the six to eight weeks it could take to ship a physical rewards card.

The CIBC pilot will see the bank use Qarrot to offer incentives to its frontline staff to sell more services or products such as credit cards. The bank is an example of the large franchise networks the company is targeting, Mr. Carr said.

“That’s where our software approach really plays to our advantage,” he said. “To roll out a program across 1,000 locations, that takes quite a bit of co-ordination if you’re going to do it without a software platform.”

Mr. Carr said there is a “huge” opportunity in front of his company.

“You see how this business scales very rapidly when you get into large retail chains and large franchise chains that have big store networks and a lot of staff,” he said.

L-Spark advisers are now helping Qarrot with its investor pitch and Mr. Carr said preliminary discussions are going well. A funding announcement is expected within 60 to 90 days and more contracts should be announced later this year, he said.

The company is focusing on North America for the short-term but is open to international growth, Mr. Carr said, especially in western European markets that are similar to Canada and the United States. That could come in the next 12 to 18 months, he said.

“I think for us, the reason for starting in North America is obviously, we’re small. We want to establish a leadership position.”